GUEST WORDS - “The Declining Middle”, “Deindustrialization”, “The Hollowing Out of the Middle Class”: these were the employment headlines in the early 1980s when I started in the workforce field. Manufacturing plants were closing, middle class jobs were being eliminated, and workforce practitioners—at community training agencies, think tanks, foundations, and government—worried that a new army of low wage workers in service jobs may emerge.
Today, more than forty years later, this army of low wage workers has not only emerged, but grown: nurse assistants and home aides, retail clerks, warehouse workers, residential construction workers. During the tight labor markets of the past few years, wages in low wage jobs increased, and increased faster than other jobs. But the pace of wage growth in these jobs has slowed in 2023, and the wage gap between these jobs and middle class jobs has widened since the early 1980s. The federal and state governments try various skills upgrading approaches, with little or no impact in most cases.
Into this quandary arrives Michael Lind’s new book on the wage gap, Hell to Pay: How the Suppression of Wages is Destroying America. Any book by Lind is to be welcomed. Lind, one of the founders of the New America Foundation and professor at the University of Texas, stands out today among policy analysts and think tank denizens for his depth and range of knowledge, force of narrative, and his willingness to break ranks from the establishment Democratic Party orthodoxies. Hell to Paycontinues his contrarian themes, taking aim at the “Good Jobs” strategies of the Biden Administration, and setting forth very different jobs strategies.
Lind characterizes the wage gap as the central employment and economic issue of the time, and his argument might be summarized as follows. The national economy is creating enough jobs—the latest Job Openings report still shows more than 9.6 million job openings nationwide as of the last day of March. But a large and growing percentage of these jobs, including ones that provide essential goods and services, pay less than a livable wage.
The low wages do not reflect the lack of skill. The nurse assistant, the retail clerk, the warehouse worker, will often display craft and art in their job. Rather the pay, or lack of pay, reflects the diminished bargaining power of workers in these positions. Several forces have come together in the past few decades to result in this decreased bargaining power which Lind identifies as follows:
“De-unionization; government trade and investment treaties that make it easier to offshore jobs; government immigration policies that expand low-wage legal immigration or fail to enforce sanctions against hiring illegal immigrants; allowing inflation to lower the value of federal, state and local minimum wages year after year; and a system of public assistance that compels its recipients to work at poverty-wage jobs.”
The cheap labor that certain employers and consumers benefit from, and that is pushed along by the open borders advocates, is not really cheap. The costs are socialized, paid for by taxpayers in welfare state benefits. Lind cites a number of studies, including the 2019 Brookings report finding 26% of low wage workers relying on the government safety net for assistance.
Offshoring and mass immigration, “global labor arbitrage” are singled out by Lind for their impacts in driving down wages. Offshoring, the transfer of jobs to lower wage workers outside of the United States, destroyed manufacturing centers, stalled technological improvements in manufacturing, and spread to a range of jobs outside of manufacturing. Mass immigration created a pool of low wage labor, undermining decent wages especially in the range of jobs that do not require college degrees. Lind particularly objects to the idea that immigrants are doing jobs that native born or naturalized citizens will not undertake: Americans will do these jobs if the pay was at the level it should be.
“The Anti-Worker Welfare State” is how Lind defines the delinking of government health and welfare supports from jobs. This delinking has encouraged the welfare state expansion of the past decade, undermining worker independence and security. Lind draws on Franklin Roosevelt’s model of social security and on the Medicare system as examples of government benefits that are not means-tested and exist with decently paid jobs. He contrasts the current “low wage/high welfare system” with a Rooseveltian “living wage/social insurance system”.
As well as highlighting low wage dynamics, Lind addresses some of the strategies for rising wage levels, including the popular strategy of increasing college attendance. In a chapter entitled “The Credential Arms Race”, Lind notes that a good number of college graduates today already work in jobs that do not require degrees. In most sectors, college serves mainly as a sorting mechanism—beneficial for some college graduates, but not significantly increasing the number of decently paid jobs. In fact, the main employment impact of increasing college attendance has been to increase well-paying administrative jobs at the colleges themselves.
In the final third of the book, Lind sets out a series of his own strategies for improving the situation of low wage workers: trade and immigration policies, welfare state reforms and minimum wage levels, and most of all a number of new government wage support structures and supports aimed at low wage jobs. Lind roots these new structures in a tradition of “national developmentalism”, which he traces through Hamilton, Lincoln, Roosevelt and Eisenhower. National developmentalism involves a more active role for government in the economy, but within a market-based system.
For industries dominated by large scale manufacturing, infrastructure, transportation or warehousing companies, Lind proposes a new system of national sectoral bargaining, modeled on the Railway Labor Act. Employers and worker representatives would set basic wages and working conditions not on the firm level, but across the sector. The sectoral bargaining would be largely national in scope, and would cover workers even if they did not belong to unions.
For service sectors dominated by small businesses, wage boards (also known as wage standard boards) would be established. In the place of collective bargaining, these boards would set minimum wages and condition across the sector. The boards, elected or appointed, would include representatives of labor, business, and consumers, and would calibrate different requirements on the state and local levels.
Taken together, these policies in Lind’s view, will begin a movement back to the middle class economy of the first three decades of the post-World War II period. In the final chapter, “Making America Work for American Workers”, Lind writes,
“If I have persuaded you of nothing else in this book, I hope that I have convinced you that the economic trends I have enumerated—and the harmful social trends that they inflame—cannot be sustained.”
With his policy recommendations, Lind is operating at the 10,000 foot level—as he will be the first to acknowledge. Each of these recommendations raises real world problems, complexities and tradeoffs. This is especially true of the systems of wage boards that he presents.
Even sympathetic readers will likely pause, given the many negative unintended consequences and failures of previous wage and price control attempts. The wage boards also call to mind what we’ve learned about the problems of bureaucracies in America: once established, they have their own imperatives to greater-and-greater growth and stymying of small businesses. Lind has written in some fuller detail on these wage boards and related small business grants to increase productivity, and hopefully he will write more, addressing the difficulties with any wage board approach.
Yet, the book’s importance does not rest on agreement with its policy recommendations. What Lind does in this book, as in his other writings, is see the broad landscape of employment in a way others do not. This includes seeing through often-superficial “Good Jobs” rhetoric on the left, including the “Good Jobs” rhetoric of the Biden Administration.
The Biden Administration has made “Good Jobs” a central part of its employment policies. Over the past three years, the Administration has given out hundreds of millions in “Good Jobs” grants, with the justification that these grants are moving workers from so-called bad jobs with no future to good jobs with careers.
So far in practice, the Biden grants have benefited mainly the planners, consultants, meeting organizers and others in government and non-profits tasked with developing “Good Jobs” plans. Very little of the money has found its way into the pockets of low income workers.
More fundamentally, the Biden “Good Jobs” projects may be moving some workers into middle class jobs, but often at the expense of others. They rarely are changing the structure of jobs. What is needed, as Lind emphasizes, is to impact the demand side, to change the structure of low wage jobs.
Yes, there is no downside to training workers to become advanced manufacturing technicians, HVAC technicians, marine trades craftspersons, medical assistants or even coders. But the economy will continue to need nurse assistants, home health aides, security guards, retail clerks, and other currently low wage jobs. These jobs cannot be dismissed as bad jobs, to be ignored or denigrated.
“I come from a long line of small business owners, farmers and ranchers”, Lind writes. He comes to his writing, here as elsewhere, with a mission of defending capitalism from its enemies today, by giving more workers a stake in the system, expanding the middle class. He is not alone, even in today’s Democratic Party. More on this to come in the next months.
(Michael Bernick is a California Employment Development Department director, and today am Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and Fellow with Burning Glass Institute, and research director with the California Workforce Association. His newest book is The Autism Full Employment Act (2021).)